Fraud Prevention: Knowledge-based analytics in steep decline

In a new impact report, Aite Group research director Julie Conroy finds that the use of knowledge-based analytics are on a fast decline, while various forms of behavioural analytics continue to see strong growth. Behavioural analysis is a cornerstone of NuData Security’s fraud prevention and detection solution.

Conroy’s new report, “Digital Channel Fraud Mitigation: The Mobile Force Awakens,” details the latest threats to banks and their customers, and looks at the technologies being used by banks. The research, which is based on spring 2015 Aite Group interviews with 26 fraud executives from 19 North American financial institutions that have more than $50 billion in assets, details the latest threats to banks and their customers, and delves into the technologies banks are using today and will roll out over the next two years.

The report’s findings include:

More than half of the banks using knowledge-based authentication technology expect their use of the technology to decrease over the next two years.

Six of the interviewed banks will enable biometrics for mobile banking login by the end of 2015.

Various forms of behavioural analytics continue to see strong growth, with the majority of banks having at least one solution in place and many having a second in either production or pilot.

Seventy-nine per cent of banks expect to increase investment in online and mobile fraud mitigation technology spending over next two years. The 20 per cent of financial institution executives who are facing flat budgets have expressed frustration, with one stating: “Race cars don’t have good brakes because they go fast, they go fast because they have good brakes.”

Examples of behavioural analytics/biometrics can include the way someone types, holds their device or otherwise interacts with it. When combined, continuous behavioural analysis, and compiled behavioural biometric data, deliver far more intelligence than traditionally available without interrupting the user’s experience.

Julie Conroy, research director, Aite Group, said in the report “While this technology is sometimes classified as biometrics, it is not subject to the same onerous laws as traditional biometrics, therefore Aite Group categorises them as a form of behavioural analytics. Leading vendors in this arena include NuData Security. When the biometric is paired with strong device authentication, it is even more difficult to defeat. Many biometric solutions also include liveliness checks, to ensure it’s a human being on the other end.”

NuData Security’s NuDetect online fraud engine, which uses continuous behavioural analysis and compiled behavioral biometric data, is able to predict fraud as early as 15 days before a fraud attempt is made. The early detection offered by NuDetect provides organisations the time to monitor, understand and prevent fraudulent transactions from taking place.

Michel Giasson, CEO, NuData Security, said “With continuous behavioural analysis paired with enhanced Device ID and biometric analysis, NuDetect offers a combination of layers in one solution unmatched in the fraud detection space. Organisations gain the ability to identify suspicious activity while tracking and analysing behavioral biometrics helps us understand how a user truly acts – and in turn, helps us verify good users from bad ones. As Aite outlined, identifying and baselining good customer behaviour, then identifying deviations from this, is a point of emphasis for executives looking to advancing their behavioural analytic capabilities.”